Question

The financial industry is undergoing a radical shift, one driven by new competition from Finance Techs, changing business models, mounting regulation and compliance pressures, and disruptive technologies.

The emergence of Finance Tech startups is changing the competitive landscape in financial services, forcing traditional institutions to rethink the way they do business. As data breaches become prevalent and privacy concerns intensify, regulatory and

compliance requirements become more restrictive as a result. And, if all of that wasn’t enough, customer demands are evolving as consumers seek round-the-clock personalized service. These and other financial industry challenges can be resolved by the very technology that’s caused this disruption, but the transition from legacy systems to innovative solutions hasn’t always been an easy one. That said, financial industry need to embrace digital transformation if they wish to not only survive but thrive in the current landscape.

 

Based on the statement above, analyze the main challenges that might affect financial industry nowadays.

Answer 1

The main challenges of Financial Industry Nowadays are as follows-

A) Change in customer preference -

Apart from traditional forms of loans in the previous era the current financial industry is coming up with innovative services . These include supply of goods and services mainly personalized goods for credit, Small personal loans with very low documentation, Instant loans through payment apps etc. THis change is also leading to increase in the business models

B) Digitalization -

Digitalization has not only changed the financial industry but also many other industries . Under digitalization process banks and financial institutions are now a days providing credit to customer even without physical interaction. This includes collection of confidential documents from customer for their identity and credit worthiness

C) Greater cost on Technology-

Current era is all about finance techs . Finance techs have the most innovative products and they provide credit seamlessly . They use the most advanced technology which include big data , data analytics and block chain technology. Heavy investment in these technology is also leading cost to the finance industry. Growing technology and new products is also leading improved cost on data breach and security. However this is also p[utiing pressure of the accounting industry which need new revenue recognition principles etc.

D) Statutory and Regulatory requirement -

Financial service industry is mostly prone of fruads and money laundering . The growing pace of the industry is also making financial entities to improve their compliance burden because government is coming up with new forms of reporting requirements, laws, etc.

E) Stakeholder satisfaction -

Apart from all other issues this industry should also maintain focus ion its employees and retain its customers, though profitability of  the industry has reduced by employee benefits are increasing . Diversifiying the credit lines is also leading to increase in bad loans which inturn is eroding the shareholders wealth.